As the remote work revolution continues to reshape how companies build and manage teams, many businesses are exploring new ways to hire talent across borders. Two common approaches are traditional hiring through a local entity and hiring via an Employer of Record (EOR). While both methods can employer of record services help you expand your workforce globally, they come with very different operational, financial, and compliance implications. Understanding the differences is key to choosing the best path for your remote hiring strategy.
Traditional hiring involves setting up a legal entity in the country where you want to employ someone. This gives you full control over HR, payroll, and compliance but also requires a significant upfront investment of time and resources. You’ll need to register your business, understand local labor laws, open local bank accounts, and possibly hire local legal and HR staff. For large enterprises with long-term plans in a specific region, this route may make sense. However, for small to mid-sized companies or those testing new markets, it can be an overwhelming and costly commitment.
On the other hand, using an Employer of Record is a faster, more flexible alternative. An EOR acts as the legal employer of your remote workers, handling everything from payroll and taxes to compliance with local employment laws. Meanwhile, your business retains full control over the employee’s day-to-day tasks and performance. This model allows you to quickly hire in a new country without setting up a local entity, making it ideal for fast-moving teams that need to scale globally without the red tape.
One major advantage of using an EOR is the speed to hire. With traditional hiring, setting up a legal entity can take weeks or months. An EOR can usually onboard employees within days, giving you a competitive edge in talent acquisition. This is especially important in today’s job market, where top candidates expect swift offers and seamless onboarding. Additionally, EORs can help you avoid misclassification risks — a growing concern as global labor laws become stricter.
Cost is another critical factor. While an EOR charges a fee (typically a percentage of the employee’s salary), this cost is often lower than the total expenses associated with entity setup, local legal counsel, compliance risks, and ongoing operational management. For many businesses, the simplicity and predictability of EOR pricing outweigh the complexity and long-term obligations of traditional hiring.
In conclusion, the right hiring model depends on your company’s goals, timeline, and resources. If you’re building a permanent presence in a specific country with a large team, traditional hiring through a local entity might be the right move. But if you want to stay lean, agile, and compliant while growing a remote team across borders, an EOR offers a smart, scalable solution. In a world where work is no longer tied to geography, having the right employment strategy is critical to staying competitive and compliant in the global talent landscape.